Telecoms: Commission takes legal action against Germany and Poland over failure to consult on price-control rules

The European Commission has decided to send a formal request to Germany to comply with its obligations under EU law to use the EU consultation mechanism when regulating mobile termination rates. These are the fees operators charge each other to connect a call between their networks and are included in each user's phone bill. Germany's telecoms regulator, the 'Bundesnetzagentur', did not consult the Commission or other national regulators, as required by EU law, on the level of its mobile termination rates. Without this consultation, there is a much higher risk that regulation of termination rates differs significantly among Member States, distorting competition in the Single Market for telecoms services. The Commission's request to Germany takes the form of a reasoned opinion under EU infringement procedures. On a similar issue, the Commission has decided to send a request for information to Poland concerning its telecoms regulator, Urząd Komunikacji Elektronicznej (UKE). The Commission is concerned that UKE may have circumvented the EU consultation mechanism and fixed the level of wholesale broadband access tariffs without prior consultation of stakeholders, the Commission or other national regulators. The information request takes the form of a letter of formal notice under EU infringement procedures.

Germany

The Commission launched an infringement proceeding against Germany last year (see IP/09/1008) because the national regulator, Bundesnetzagentur, had failed to notify the Commission and other telecoms regulators of regulatory measures setting mobile termination rates and how they were calculated. Consultation in this area is especially important since the price that users from one Member State have to pay for calling a number in another Member State is affected by the levels of termination rates set in the destination country. In May 2009, the Commission adopted a Recommendation on the regulation of termination rates in the EU, setting out clear guidance for EU telecoms regulators on the cost-based method to be used when calculating termination rates (see IP/09/710).

Although some form of cost orientation is provided for in most Member States, the methodologies to set termination rates still vary considerably across the EU. This creates fundamental competitive distortions and impedes the development of the Single Market in telecoms services (a problem highlighted by the latest report on implementation of EU telecoms rules – see IP/10/602). EU telecoms rules require national regulators to cooperate and consult with regulators from other Member States and the European Commission on termination rates. Creating a truly Single Market in telecommunications is a key objective of the Commission's Digital Agenda for Europe (see IP10/581, MEMO/10/199 and MEMO/10/200).

If Germany does not take the necessary measures to comply with the EU consultation requirements within two months, the Commission could refer Germany to the EU Court of Justice.

Poland

The Commission also decided to send Poland a letter of formal notice because it is concerned that UKE may have failed to respect consultation obligations under the EU's telecoms rules on wholesale broadband access tariffs. Wholesale broadband tariffs are fees operators charge each other to provide broadband services to end-users.

On 12 April 2010, the President of UKE adopted a decision which fixed Telekomunikacja Polska's wholesale broadband access tariffs and the way they are calculated. The decision also introduced the rules for conducting price and margin squeeze tests in line with an agreement signed between the President of UKE and Telekomunikacja Polska in October 2009 on non-discriminatory treatment of alternative operators. In this way elements of the agreement were formalised in a legally binding decision. However, the draft of this decision had not been the subject of a consultation with stakeholders at national level or made available to the Commission as required by EU telecoms rules.

Background

The EU telecoms rules (the "Article 7 procedure") require national regulators to inform the Commission and the regulators in other Member States of draft measures affecting trade between Member States, and provide the reasoning on which the measure is based. National regulators and the Commission may give their comments on the measures proposed. This allows more consistent regulation across Europe (see MEMO/10/226).